Sunday, January 10, 2010

More on traditional to Roth IRA conversions

So, Happy New Year to everyone! It's 2010 now, which means we can start converting our traditional IRA's to Roth!
Now, one more thing I found on these conversions- you may be able to "re-characterize" your newly converted Roth IRA back to traditional within the year after the original conversion.
Why to do that?
Suppose you had $10,000 in your traditional IRA, which you funded tax-free. Upon conversion, you'll owe your going rate (28-32% or whatever your tax bracket is) on this converted amount.
Suppose now, that within a year your original 10k dropped in value to 8k. Then you can do "re-characterization" of your Roth back into traditional IRA to avoid paying taxes on already depreciated asset.
Some authors even advise to create several Roth IRA's and transfer each kind of assets
( US large, US small, emerging markets, bonds, etc) into a separate Roth IRA. That way, you can see what depreciates ( hopefully none, but you never know), and "re-characterize" it, leaving appreciated assets in their respective Roths.

2 comments:

Unknown said...

Hi Admin,

I am Carol. I have visited your website and I would like to congratulate you on building such a valuable online resource. I am sure your visitors find your site as useful as I did.
My site also has relevant information in the same context, which I am sure your visitors will really appreciate. It would be great if we exchange links with each other. It would boost your search engine rankings, as relevant inbound links is the most important criteria for ranking on most search engines. It would also help bring targeted traffic to your site and reach out to a valuable, relevant audience.

If you are interested then please revert back to me ASAP. If you are not the concerned person then would request to kindly forward the mail to the respective person.
Waiting for your quick and positive reply.
Have a great day.

Thanks and regards
carol
Contact: nancysix00@gmail.com

Payday Loans Online said...

Thanks for this informative post.The information shared is just very educative